Norway is a Scandinavian country located in Northern Europe, bordered by Sweden, Finland, and Russia. It is known for its breathtaking fjords, mountains, and glaciers. Norway has a long and rich history of seafaring and fishing, which have played a large role in defining its culture. The country also has an impressive variety of wildlife, such as moose, reindeer, whales, seals, and puffins. Norway is home to some of the world’s most spectacular scenery and is the perfect destination for outdoor enthusiasts. Norwegian culture is based around values such as respect for nature and equality among citizens. Norway has a strong economy that is largely driven by oil production and exports from its North Sea reserves. Its government provides generous social benefits to citizens including free education through university level. See countries that begin with N.
Norway. According to CountryAAH, the total population in Norway is 5,421,252 people in 2020. Norway got a new heir in January, when Crown Princess Mette-Marit gave birth to a girl named Ingrid Alexandra.
At the beginning of the year, Norwegian police arrested the Islamist leader Mulla Krekar from Iraq, who with his family had taken asylum in Norway for a long time. The Kurdish Islamist was charged with involvement in murder trials in northern Iraq. Krekar has been considered a leader of the Ansar al-Islam organization and was designated – albeit without evidence – in connection with the 2003 Iraq War as a link between al-Qaeda and Iraqi dictator Saddam Hussein. In the early summer, the preliminary investigation against Mullah Krekar was closed, after the police failed to interrogate witnesses in Iraq. According to abbreviationfinder, NO stands for Norway in text.
The government decided to take home the Norwegian engineering troops from Iraq at the turn of the year. The decision was justified by Norway having to prioritize its involvement in NATO operations in Afghanistan. Foreign Minister Jan Petersen denied that the increased violence in Iraq had affected the government’s position, which remained firm despite the United States’ appeals for an extension of the Norwegian operation. The NATO country Norway did not support the US-led invasion of Iraq in 2003, but sent 180 engineer troops to help rebuild southern Iraq.
The Conservative government party Høyre changed its leader in May, when Foreign Minister Jan Petersen was replaced by the Prime Minister, Erna Solberg. She declared herself willing to be the right-wing leader who brought Norway into the EU. The coalition government between Prime Minister Kjell Magne Bondevik’s Christian People’s Party, Høyre and Liberal Liberals disagrees with the EU issue and has a so-called suicide clause, which means that the government is dissolved if Høyre addresses the demand for Norwegian EU membership.
In June, Bondevik reformed its government with the goal of rejuvenation and modernization. Several ministries were closed down or merged. Christian People’s Party leader Dagfinn Høybråten was named super-minister in the new Ministry of Labor and Social Affairs, which was also expanded with parts from other ministries. Høybråten had received a lot of criticism for moralism, but the smoking ban he was behind as former health minister and which came into force in June was supported by a majority of the people. Norway became the second country in the world after Ireland to ban smoking in all restaurants, bars and cafes.
The smuggling of wood spirits continued to harvest death victims in Norway During the year, the police seized 25,000 liters of wood liquor and arrested two men who were later charged with nine and three poison murders, respectively. One of them, a 75-year-old, was suspected of engaging in liquor smuggling since the 1940s and becoming a millionaire in that way. The wood spirits must have been brought in from above all Portugal
In August, three armed and masked robbers entered the Munch Museum in Oslo and stole the artist Edvard Munch’s famous paintings “Skriet” and “Madonna”. A female guard was threatened with a gun to the tempest and panic arose among visitors who thought it was all a terrorist act. See mcat-test-centers.com for vocational education in Norway.
Norway received threats during the year from what was assumed to be the al-Qaeda terror network. The record high oil prices caused the state’s petroleum fund to increase to more than SEK 1,000 billion during the year.
Trends in business and class structure
Some believe that Denmark is no longer a class society, that there is no longer a distinction between rich and poor, and that everyone has the same opportunities. In order to kill this claim, the list of the 10 richest Danes is initially reproduced.
|Person/family||Corporation||Wealth (DKK billion)|
|Maersk McKinney Møller||AP Møller||141.2|
|The Families Can Rasmussen||Velux Industry||35.4|
|The Kirk Kristiansen family||Lego||28.5|
|The Clausen family||Danfoss||15.4|
|The Due Jensen family||Grundfos||15.2|
|Lived after Herman Salling||Salling||12.1|
|The Holc Povlsen family||Bestseller||11.0|
|Lars Larsen||Jysk Holding||10.2|
|The Louis-Hansen family||Coloplast||8.1|
|Denmark’s 9 richest persons and families (2006). Wealth in billions and the company where the workers have created this wealth. (Stock Exchange News Magazine)
Under the bourgeois VKO government, the richest have become rapidly richer. In 2006, 59 Danes and Danish families were billionaires.
As Figure 1 above illustrates, there has been a continuing emigration from agriculture and a corresponding expansion of employees in crafts and industry. Figure 2 illustrates the expansion in employment during the period 1970-95. Agriculture continues to decline dramatically, but also in trade, construction and manufacturing, employment has declined: from 49% of total employment in 1970 to 37.6%. This development reflects the development of productivity in special industries and construction. The decline would have been even greater had it not been for the strong increase in exports during the same period. More on this later.
The decline was offset by a correspondingly sharp increase in public employment, which increased from 19% to 32.7% during the period. In terms of manpower, it was almost a doubling. But also the private service business has progressed during the same period.
Developments in the labor market over the past 20-25 years have helped to further divide the working class. Not only are its traditional political parties’ political projects in crisis (this applies to both the Socialist capitalist welfare state model and the left-wing socialism). Economic developments also create even more fractures, and it is only on rare occasions such as during the 1998 major conflict that the contradictions for shorter periods can be reduced and joint footings can be created. The working class, therefore, despite a high organizational percentage, is weakly opposed to the bourgeoisie’s continued offensive.
In frustration, especially the most marginalized sections of the working class respond by blaming the development on refugees and immigrants, throwing themselves into the arms of xenophobic parties such as the Danish People’s Party. This development of rising racism in Danish society is further fueled by the media’s treatment of the problem and the crisis in general. Furthermore, it is pushing the entire political agenda – and especially the Social Democracy – in an increasingly xenophobic direction.
Tempo restrictions are lifted
For some Norwegian companies, the transition to more open competition was difficult, but most were successful. Foreign-owned supplier companies largely used Norwegian engineers and workers when they took on assignments on the Norwegian continental shelf. Many Norwegian-owned companies secured significant assignments abroad. The most important reason for the success of most people was probably because all restrictions on limiting the pace of the oil sector were lifted. There were several assignments for everyone.
Immediately after the Storting’s decision in February 1988 to set an investment ceiling, a sharp fall in prices was experienced in the Norwegian real estate market. This led to a serious crisis in the Norwegian financial sector. Many banks had to be taken over by the state. The crisis led to considerable unemployment in Norway. Growth in the Norwegian oil sector thus became an important tool for getting the Norwegian economy back on track.
When oil production in the time that followed increased sharply, it was due to several factors. New technology was developed that made it possible to extract more oil and gas from fields than previously expected. The 1990s became a breakthrough for advanced underwater technology, moving from solutions that had previously used divers to assemble and operate equipment, to automated solutions such as remote-controlled underwater vehicles (ROVs).
The most important thing was to give up all attempts to slow down the development. In 1993, investments had risen to NOK 57 billion. This was more than double the investment ceiling set in 1988. The total oil and gas production in 2000 reached 280 million oil equivalents. The scale had changed somewhat, but it corresponded to about three times the ceiling set by the Storting in 1974.
New organization of ownership
Although there was considerable political agreement to establish a strong state oil company, early fears arose that Statoil would become too dominant. As prime minister, Kåre Willoch made several attempts to curb Statoil’s dominant role. In his autobiography, Willoch later shows that Statoil had significant influence over his own party as well. On the left, too, many Statoil’s dominance was considered problematic. In the spring of 1984, the parties to the Storting reached a settlement that stripped the company’s extensive ownership rights. The state’s involvement in the oil business was divided in two. As before, one part was controlled by Statoil. The second part, the State’s direct financial involvement in the oil business (SDFI) was, as the title suggests, controlled directly by the state.
The SDFI became an effective instrument for collecting oil interest to the nation. The SDFI’s holdings were particularly concentrated in the fields where revenue was expected to be particularly large. Until 2001, the SDFI acted as a state holding company, with no operational activities, governed by a small administration – in practice a small office in the Ministry of Petroleum and Energy. Around 2000, the SDFI managed oil reserves about three times as much as Statoil.
Statoil continued to grow as an operating company, although the company was not given the same advantages in concession awards as in the 1970s. In 1990, under the leadership of Harald Norvik, Statoil entered into a strategic alliance with BP. The companies were to operate together in a number of exploration areas internationally. Together with BP, Statoil secured holdings in important fields in countries such as Azerbaijan, Angola and Nigeria. Internationalization was partly a response to a recognition that production on the Norwegian continental shelf was approaching a historic peak. At the same time, opportunities were opened internationally after a number of nations opened up to international companies following the collapse of the Soviet bloc.
Also for the Norwegian supplier industry, a turn towards international markets was a response to the special situation that prevailed around 1990. With the opening for international investment that followed the EEA agreement, a number of Norwegian companies were acquired by foreign companies. Norwegian companies such as Aker, Kvaerner and Smedvig responded by acquiring companies in the UK, Asia and the US.
When BP merged with the US oil company Amoco in 1998, the company broke off cooperation with Statoil. At this time, Statoil was involved in several international projects on its own. Low oil prices led to many projects failing. The same low prices combined with unfortunate international acquisitions contributed to the bankruptcy of the private Norwegian oil company Saga Petroleum. Most of Saga was taken over by Norsk Hydro. Statoil took over the operation of the Snorre field. On the supplier side, Kvaerner experienced problems due to similarly unsuccessful international acquisitions. Kvaerner was taken over by Aker.
Privatization, Petoro and merger
In 1999, Statoil launched plans to privatize the company. An important reason was the desire to be more flexible in investing internationally. The Board of Directors proposed that Statoil should again take over the SDFI to have a stronger capital base to expand internationally. The proposal for a partial privatization of Statoil received the necessary support in the Storting on April 26, 2001.
Up to 1/3 of Statoil’s share capital could be traded freely on the stock exchange. The proposal that Statoil should take over the SDFI was rejected. Admittedly, both Statoil and Norsk Hydro were able to buy a small share of the SDFI, but in practice the SDFI was strengthened by being removed from the Ministry and established as a separate state holding company under the name Petoro. The headquarters were added to Stavanger.
Petoro had no operational responsibility. In terms of reserves and revenues, the company was far larger than Statoil. In 2008, Petoro’s best year, the company alone accounted for NOK 158.8 billion of the state’s total oil revenues. 239.6 billion came from taxation of the companies, only 16.9 billion was from Statoil-Hydro.
In 2007, Statoil’s dominance as operator on the Norwegian continental shelf had increased further as a result of the company merging with Norsk Hydro’s oil segment. Following the merger with Hydro, the state owned about 67 percent of the shares in the company. The remainder was distributed to private Norwegian and foreign shareholders. The company was named StatoilHydro until 2009 when the merged company took the name Statoil. In 2019, Statoil changed its name to Equinor. The company justified the change of name in that it would be a driving force in the reorganization of the energy systems and that a change of name reflected the company’s strategy of becoming a broad energy company.
Production decline and international success
The 2000s started with a minor crisis for the Norwegian oil industry. Oil and gas production on the Norwegian Shelf was greater than ever, but many Norwegian oil suppliers struggled as a result of low oil prices. The problems of Saga Petroleum and Kvaerner were part of this crisis.
However, from 2002/2003, oil prices began to rise. At the same time, the Norwegian authorities implemented several expansive measures to keep up the activity on the Norwegian continental shelf. In 2003, the Ministry of Petroleum and Energy introduced a new and far more frequent allocation scheme for “mature” areas (allocations in predefined areas APA). Here, the bureaucratic and political processing of applications was far less complicated. A scheme was introduced in which oil companies could more or less freely trade already allocated shares in blocks. The opening did not only apply to established oil companies.
The Norwegian Petroleum Directorate followed up with a process whereby new companies were “prequalified” to own and sell shares on the Norwegian continental shelf. At the same time, the Directorate opened for a somewhat smaller, but growing group of companies to be accepted or qualified as operators. Exploration activities were stimulated by the favorable deduction schemes for exploration activities also being made applicable to companies without income. In practice, this meant that companies were paid money from the state in accordance with what they would have received in deduction if they had had income.
Norwegian oil production reached its historic peak in 2000 of 181 million Sm³ of oil equivalents. In 2004, total petroleum production (oil, gas, condensate, NGL) reached a peak of 264 million Sm³ of oil equivalents. By this time, however, oil production had begun to fall sharply.
As production fell, investment rose sharply. In 2012, a total of NOK 200 billion was invested in Norwegian oil operations. Converted to NOK 1988, this was an investment level that was more than three times the level that the Storting had set as a ceiling in 1988. At this time, the investments were not only related to activity on the Norwegian continental shelf. The international turnover of Norwegian supplier companies was now higher than what the total Norwegian turnover had been around the year 2000.
Norwegian oil economy
Norway had the advantage of being close to large markets and of political stability. This made Norwegian oil and gas more attractive than the production that came from many major producer countries in other continents and with politically unstable regimes.
When Norway established the goal of a moderate recovery rate in the 1970s, it was partly to prevent what economists later termed as Dutch sick. That is, a situation where a suddenly large source of income linked to a natural resource can increase the cost level in general in society, thus weakening competition to other competitive industries.
When Norway changed the policy when it came to limiting the pace of recovery in the early 1990s, it was because the establishment of an oil fund was meant to cover the same function. The Government Petroleum Fund was established as early as June 22, 1990, but the first deposits came only in 1997. The combination of what was initially a high production and oil prices that rose far more sharply than a fall in production, led to a sharp growth in transfers to the Fund..
Up until the mid-1990s, oil revenues had mostly been used to pay for the investments that had to be made. The development of the oil fields, continued exploration drilling, as well as the development of pipelines for the transport of oil and gas to the continent had required large investments for the companies involved.
The Norwegian authorities had invested in the development of Norwegian administration, security, education and other public services. In 2000, the Stoltenberg government introduced a so-called rule of action that placed restrictions on the proportion of the fund that could be consumed. The purpose was to prevent overheating of the Norwegian economy.
However, in the years following the financial crisis, the sharp growth in investment in the oil sector was so great that many economists talked about a two-part economy and that despite the intentions, Norway was hit by ” Dutch sick “. Norway was then the world’s third largest exporter of both oil and gas. In the years between 2000 and 2014, Norway had a gross domestic product (GDP) that was at the top in Europe.
Falling oil prices in the fall of 2014, together with a fall in oil production, led Norway to fall to fourth place in GDP in Europe and to a tenth place among the world’s oil producers. However, gas production continued to increase, and the petroleum industry is still the largest industry in Norway and, according to the national accounts, contributed over 21 percent of GDP in 2019.
In 2020, the state expected oil revenues to contribute around NOK 273 billion to the Treasury, but a sharp fall in oil prices in the spring of 2020 sent the price down from over $ 60 a barrel to below $ 20 a barrel. The fall in oil prices was due to two factors. Firstly, there was already too much oil in the market, which was further strengthened when the corona pandemic hit in March 2020. The world’s oil consumption dropped significantly and supply was far greater than demand. The Opec countries and Russia therefore signed an agreement on production cuts. In an attempt to help stabilize an oil market in crisis, Norway also contributed to production cuts. At the end of April, the Ministry of Petroleum and Energy announced a cut of 250,000 barrels of oil per day in June and 134,000 barrels per day for the rest of the year.
The idea of a Norwegian oil fund arose in the 1960s when Gerhardsen and his government declared sovereignty over the Norwegian continental shelf. This laid the foundation for an oil policy based on strong governance, in which the Storting drafted the guidelines for long-term management of our oil and gas resources.
From the beginning, it was clear that the petroleum activities would have a limited duration. In order to ensure that the income could also benefit future generations, an oil fund was established in 1990. It first had the name of the Government Petroleum Fund and changed its name to the Government Pension Fund Global in 2006. The oil fund was to be a buffer for government finances. Profits on the state budget were transferred to the fund, while deficits were covered by drawing on the fund. The fund is also a tool for managing state financial challenges related to increased pension payments and declining petroleum revenues. The fund should therefore have a long-term perspective, but so that it could be used when needed.
From the beginning of the 2000s, most of the revenue was used to build the fund. In 2019, the Oil Fund reached a historic milestone by passing NOK 10,000 billion. At the start of 2020, the value was NOK 10 088 billion. This corresponds to almost NOK 1.9 million per capita. Norway thus has a far greater financial freedom of action than any other European state. Internationally, the Norwegian Oil Fund is one of the few examples that a nation has managed to manage petroleum revenues for the benefit of the community and in a way aimed at safeguarding future generations.